Internal Revenue Service Penalizes Second Tennessee School System Over Obamacare

The Grundy County School System will have to pay tens of thousands of dollars in penalties to the Internal Revenue Service for not complying with Obamacare, according to a state audit released this week.

This is the second school system in Tennessee this month that must pay a huge sum of money to the feds because of the controversial health care law.

Local taxpayers, of course, will have to pick up the slack.

No one at either the Grundy County School System or the county mayor’s office returned The Tennessee Star’s repeated requests for comment Tuesday.

According to this week’s audit, the Internal Revenue Service assessed the school system a penalty of $34,060 for not complying with Obamacare during the 2015 fiscal year.

“The School Department provides health insurance coverage to its employees; however, this coverage was not in compliance with federal regulations for certain employees,” Tennessee Comptrollers wrote.

“This deficiency resulted from a lack of management oversight.”

As The Star reported this month, the federal government assessed the Smith County School System more than $35,000 for not complying with Obamacare.

That audit, however, did not offer specifics.

Smith County Mayor Jeff Mason, in an email, deferred all The Star’s questions to Director of Schools Barry Smith.

Smith, on the phone, deferred all questions to the school system’s Chief Financial Officer Norma Mitchell. Mitchell did not return two requests seeking comment.

Other county governments in Tennessee have had their finances suffer due to Obamacare.

As The Tennessee Watchdog reported in 2015, an audit from Tennessee Comptroller Justin Wilson said Obamacare might have forced Robertson County officials to choose between raising taxes and breaking the law.

County commissioners transferred $632,500 from the General Debt Service Fund to the General Purpose School Fund to comply with Obamacare, according to Wilson’s audit. County officials needed the money to pay for health insurance for part-time employees working 30 hours a week or more, such as bus drivers and substitute teachers.

The General Debt Service Fund exists to pay county debt, while money from the General Purpose School Fund pays to keep the schools running.

Comptrollers said the transfer was illegal, based on existing case law and existing opinions from the state attorney general.

According to the Tennessee Attorney General’s Office, if a taxpayer pays taxes for a specific purpose then any other use of that money is against the law.

As The Tennessee Watchdog reported in 2013, White County officials had to raise taxes by an additional $1 million per year so county employees would have health insurance.

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected]
Photo “Grundy Courthouse” by Brian Stansberry. CC BY 3.0.










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2 Thoughts to “Internal Revenue Service Penalizes Second Tennessee School System Over Obamacare”

  1. […] The Tennessee Star reported, the Grundy County School System will have to pay tens of thousands of dollars in penalties to the […]

  2. Bruce Ross

    It should be noted that Grundy county is the poorest county in the state. So this Obamacare is making the poorest of the poor pay more.